Worries over possible abuse of EIS benefits


The Federation of Malaysian Manufacturers (FMM) has voiced its concerns over possible abuses to the proposed laws that would compensate retrenched workers.

The organisation that represents the majority of the country’s manufacturers is also worried that the Employment Insurance System Bill 2017 (EIS) would lead to higher cost and a drop in productivity due to the availability of a “safety net” for unproductive workers.

The association claimed that those who were retrenched, and had received their employment termination and layoff benefits, would receive double benefits.

“The transfer of benefits to dependents is confusing as this provision had never been highlighted during the engagement with employers,” FMM said in a statement yesterday.

It highlighted that workers under the voluntary separation scheme and mutual separation scheme will be receiving double benefits either from their severance package or under the EIS.

FMM said the EIS could push human-related costs higher, but without higher work productivity and quality.

“We are most concerned that the EIS could cause further deterioration in work attitude and commitment,” FMM said, adding that the federation would like to scrutinise and review the details of the bill before it is implemented.

The government had tabled an employment insurance bill to protect retrenched workers in Parliament on Tuesday.

Meanwhile, the Malaysian Employers Federation wanted the EIS to include savings elements for the welfare of employers and employees.

ED Datuk Shamsuddin Bardan said the funds raised from the scheme should be channelled back to the employers and employees, if neither parties are involved in either shutting down a company or any separation schemes.

The bill was tabled by Human Resources Minister Datuk Seri Richard Riot Jaem and is expected to be passed during the current sitting of Parliament before it ends on Aug 10.

The proposed insurance would be administered and operated by the Social Security Organisation (Socso) and governed by the Human Resources Ministry.

Under the scheme, employers and employees would have to contribute to the fund from as low as10sen each to a maximum of RM19.75, according to the worker’s monthly salary scale.

The benefits for retrenched workers under the proposed law also include early re-employment allowance, training allowance fees, job search allowance (JSA), as well as reduced income allowance.

The JSA would entail 80% of an employee’s salary in the first month, 50% salary in the second month and 40% salary in the third month.

A contributor will also need to contribute 24 months to enjoy the maximum unemployment benefit, which provides a portion of one’s insured salary up to six months when a worker remains unemployed.